Friday, August 26, 2016

"Hampton Creek Faces U.S. Criminal Probe Over Mayo Buybacks"

This thing has always had a whiff of Frat-boys-do-create-a-corp. about it.

From Bloomberg:

The U.S. Justice Department has opened a criminal investigation into
whether Hampton Creek Inc. committed fraud when it bought its own vegan
mayonnaise from stores, according to people familiar with the matter.
The food technology startup has already drawn a regulatory inquiry over
allegedly improper purchases.

Federal investigators reached out to
former Hampton Creek contractors this week to discuss the undercover
buyback campaign allegedly conducted by Josh Tetricks’s San Francisco
startup, one of the people familiar with the situation said. The
criminal investigation is in its early stages, and it’s unclear whether
the matter will lead to charges or penalties, another person said.

Tetrick, the co-founder and chief executive officer of Hampton Creek,
wrote in an e-mailed response to a question about the probe: “We have
no reason to believe this is true.” The company declined to elaborate.
Peter Carr, a spokesman for the Justice Department, declined to comment.

Bloomberg first reported early
this month that Hampton Creek bought jars of its own vegan mayonnaise
products from supermarkets across the U.S. The Securities and Exchange
Commission is scrutinizing whether Hampton Creek improperly recognized
revenue from the campaign to buy jars of Just Mayo, Bloomberg reported last week. The company confirmed the SEC inquiry.

The U.S. officials are examining whether the buyback program violated
fraud and securities statutes by making the startup look more successful
to prospective investors than it actually was, the people said. Tetrick
has said the self-purchases accounted for less than 0.12 percent of
sales and were primarily for quality assurance. The scrutiny comes as
Hampton Creek engages in fundraising efforts aimed at boosting the value of the company to more than $1 billion, people familiar with the matter have said....MORE